State income tax: Voters will decide in November

Should high earners in Washington state pay an income tax? Voters will get their say.

The secretary of state’s office on Thursday said Initiative 1098 had submitted enough signatures to qualify for the November ballot. Also Thursday, state officials asked the Washington State Patrol to investigate apparent fraud by a petition-gatherer for I-1098, a measure which seeks to impose an income tax on the wealthy.

At issue are about 20 petition sheets with 350 names, signatures and addresses that appear to have been written with the same pen and in similar handwriting, said Dave Ammons, spokesman for the Secretary of State’s office. The gatherer in question had signed her name to the back of all the petition sheets under investigation.

The 20 sheets in question – roughly 350 signatures – are a small fraction of the 24,817 sheets the campaign turned in . State officials say the campaign submitted about 385,000 signatures and a random review of 11,786 found that 10,090 were acceptable.

It takes 241,153 valid signatures of registered Washington voters to secure a place on the November ballot.

I-1098, which is championed by Bill Gates, Sr., would tax couples with adjusted gross incomes greater than $400,000 annually, or incomes of more than $200,000 for individuals. Supporters say that represents the top 3 percent of earners in Washington. It also would cut the state property tax by 20 percent and increase the business-and-occupation tax credit to $4,800. Supporters say it would bring in about $1 billion per year for education and health programs.

In January, Oregon voters approved two income tax increases, one levied on the wealthy and the other on corporations. The measures were opposed by major business leaders, most prominently Phil Knight of Nike.

A recent study by the Washington, D.C.-based Institute for Taxation and Economic Policy found that Washington state had the most regressive tax system in the country, largely because of the state’s reliance on sales tax. People earning less than $20,000 annually pay 17.3 percent of family income toward sales and excise taxes and property taxes, the report said; people in the top 1 percent of earners – those making more than $537,000 a year – pay 2.9 percent.

Income tax measures have been attempted over the years in Washington with little success (Click here for a history). A graduated income tax was enacted by initiative in 1932, passing with about 70 percent of the vote. But it was thrown out by the state Supreme Court, which pointed to the state constitution’s call for uniform taxation on property. Voters have defeated subsequent attempts to amend the constitution for a state income tax, most recently in 1973.

Since then, some legal experts have said a modern court might overturn the 1933 court decision that defeated the original income tax, arguing that the old decision is based on obsolete legal theory.

I-1098 is the third initiative to qualify for the ballot. Initiative 1082, which would change the state’s workers’ compensation insurance system, and the liquor privatization measure – I-1100 – have already been certified.